A SENIOR Cabinet
official questioned the head of Israel's
security service about allegations Israeli
undercover agents posed as Canadians
during an operation to assassinate a
Palestinian terrorist leader, newly
released documents show.

Although Ottawa has said publicly it
was convinced all along the spy claims
were false, internal documents obtained
yesterday show the matter has continued to
concern the government and has been the
subject of behind-the-scenes
diplomacy.

In a confidential report, officials
said they were concerned about "other
countries' intelligence services misusing
Canada's identity" and that "such misuse
endangers Canadians travelling around the
world and undermines the integrity of
Canadian passports."

Ronald Bilodeau, the Privy
Council Office security and intelligence
co-ordinator and Cabinet assistant
secretary, met on Oct. 1 with the head of
the Israeli Security Agency, whose spies
allegedly used false Canadian identities
during the operation in Gaza.

"The ISA is reported to have recently
had its agents pose as Canadians to lure a
Palestinian, 22-year-old Akram
Zatmeh, into informing on Intifada
leaders in return for promises of
resettlement in Canada," according to a
"Secret: Canadian Eyes Only" memo prepared
for the meeting.

The documents
do not describe the response of the ISA
chief, who reports directly to Ariel
Sharon, the Israeli Prime Minister.
Israel has denied the claims. But the
papers show Ottawa was worried about
being linked to a spy operation and a
botched assassination that killed 14
bystanders, nine of them
children.

The allegations surfaced in August,
when Mr. Zatmeh publicly detailed how he
was lured into becoming an Israeli
informant by agents who told him they were
Canadians and could help him immigrate.
Mr. Zatmeh said he was recruited by three
"Canadian" agents who brought him to the
Canadian embassy in Tel Aviv before
coercing him into helping them, with
doctored photos that showed him with naked
women.

On July 23, Mr. Zatmeh helped Israeli
agents pinpoint the location of Sheik
Salah Shehadeh, a Hamas leader. Twenty
minutes later, an Israeli F-16 fired a
one-tonne missile at the building, killing
not only the sheik but also more than a
dozen bystanders.

Mr. Zatmeh was later arrested as a
collaborator and is facing a possible
death sentence.

"Our initial concern ... was that the
press articles could be seen by some as
alleging Canadian involvement with Israel
in the assassination of Sheik Salah
Shehadeh," according to an Aug. 29
internal government memo. "Canada has
nothing to do with this or with any other
purported
Israeli operation."

After the Post learned of the
informant's allegations, officials told
the newspaper on Sept. 4 they were
satisfied the claims were false. However,
hours after the Post report on
Sept. 5, John McNee, assistant
deputy minister for Africa and the
Mideast, discussed the matter with Haim
Divon, Israel's ambassador to
Canada.